The number of mandates awarded to insolvency professionals across Asia Pacific (ex-Japan) in 2023 dropped sharply from the year earlier with large declines seen in seven of the eight jurisdictions covered by this report, despite interest rates remaining elevated for much of the year and the Asian USD primary bond market being virtually closed for most of the period.

The number of Asia Pacific (ex-Japan) advisory mandates in 2023 totalled 209 roles on situations involving an aggregate USD 127bn debt, whereas in 2022 there were a total 322 roles on total debt of USD 225bn.

The 35.1% plunge in the number of mandates in 2023 was due mostly to a 41.5% YoY decrease in advisory roles involving Chinese real estate-related situations, while mandates related to non-property PRC credits fell 32.3% from 2022 levels. In the seven jurisdictions outside of China, opportunities for advisory mandates plummeted 26.7% from 2022.

But even as the number of Chinese real estate-related mandates dropped sharply from the previous year, there were 100 mandates that arose from the 39 PRC real estate-related situations in 2023, while the USD 83bn debt that was involved was by no means small. Still, that pales in comparison with 2022, when there was a total of 171 mandates involving an aggregate debt of USD 161bn from 44 real estate companies.

Ditto for mandates from non-real estate PRC companies which totalled 21 in 2023, compared with 31 roles in 2022.

Outside China, advisory roles totalled 88 mandates on USD 22bn debt in 2023 versus 120 mandates on USD 52bn the year earlier. As such, by number, ex-China mandates represented around 42.1% of the region’s advisory roles in 2023, but only 17.1% of the total USD 127bn of debt that was being advised on for the APAC region (ex-Japan).

The YoY drop in the number of ex-China insolvency-related advisory appointments was sharpest in Hong Kong where there were only four roles mandated in 2023, compared with 14 in 2022; followed by Malaysia (2 vs 5); Australia (16 vs 21); India (24 vs 30); Indonesia (17 vs 21) and Singapore (22 vs 24). Vietnam was the only jurisdiction where there was a YoY increase in mandates, but only three roles were awarded there, and all of these were related to No Va Land’s USD 2.9bn debt restructuring.

By far, 4Q23 was the slowest quarter in terms of the number of mandates doled out during the year with only 35 appointments made on USD 38.3bn of debt compared with 61 roles in 3Q23 (USD 49bn), 73 in 2Q23 (USD 50.8bn) and 40 in 1Q23 (USD 18.1bn).

But even as appointments dropped sharply in 4Q23, those relating to the PRC real estate sector by far accounted for most of the roles across APAC (ex-Japan): out of the 35 mandates awarded in the quarter, 20 were for PRC real-estate-connected credits and involved USD 28bn of debt, or 74.1% of the USD 38.3bn of the debt pertaining to all the region’s mandates in the quarter.

Chinese real estate

As has been the case since the second half of 2021, Chinese property companies provided most of the work to insolvency professionals in the region during 2023.

Of the total 209 APAC (ex-Japan) mandate appointments made in 2023, 100, or 47.8%, were connected to Chinese real estate debtors while the USD 83bn of debt those advisory roles were related to accounted for 65.5% of the USD 127bn total debt being advised on.

During the year, 12 PRC developers completed 13 processes to restructure 56 USD offshore bond tranches with USD 22.5bn principal outstanding. Six of these restructuring processes were executed as term-out consent solicitations, four were exchange offers, one restructuring was a consent solicitation combined with an exchange offer and two more were schemes of arrangement.

Advisory mandates relating to PRC situations outside of the property sector were also significant, despite the YoY fall by number of roles. Of the total 121 mandates connected to the USD 105bn in debt pertaining to PRC-related insolvencies in 2023, 21 were for situations corresponding to companies outside of the real-estate sector and involved USD 22bn of debt. The amount of debt advised on represented a significant increase compared to USD 12bn in 2022.

As the table below shows, nine of the ten largest restructurings across APAC (ex-Japan) in 2023 were related to Chinese corporates.

Ex-China

Indian insolvencies generated the second-largest number of mandates in APAC in 2023 with 24 (11.5% of total) on debt of USD 8.5bn (6.7%). Nearly half of the debt advised on was related to Vedanta Resources Ltd’s liability management exercise (LME) which covered USD 3.8bn debt and generated seven appointments. The Indian commodity conglomerate’s LME was the largest situation outside of the PRC and one of the ten largest APAC (ex-Japan) situations in terms of the amount of debt involved.

Under the LME, launched in December and completed on 11 January, Vedanta agreed to partly repay three of its bond tranches having a total outstanding of USD 3.2bn principal and extended the maturities of their remaining outstanding amounts. The exercise also amended some of the covenants of a fourth USD 600m bond tranche.

Since the introduction of India’s Insolvency and Bankruptcy Code in 2016, the country’s banks have significantly cleaned up balance sheets mostly through court-supervised resolution processes. As such, insolvency work in the country peaked in 2018 when 74 mandates were awarded on USD 80.3bn of debt, and has since declined sharply as the chart below shows.

After India, Singapore insolvencies generated the greatest number of mandates with a total of 22 in 2023, little-changed from the 24 roles awarded in 2022. However, the amount of debt relating to the seven Singapore insolvent companies totalled only USD 2.5bn, or around 2% of the USD 127bn related to mandates in APAC during the year, and close to 52% less than the USD 5.3bn pertaining to in Singapore-insolvencies in 2022.

Indonesia-related insolvencies resulted in 17 mandates being awarded on a total of USD 3.6bn of debt from four companies in 2023. Of the 17 mandates, 11 were in connection to the ongoing restructurings of state-owned companies Wijaya Karya, Pembangunan Perumahan and Adhi Persada Properti. The only private sector situation – Agung Podomoro Land’s repurchase via a distressed tender of USD 168m of its USD 300m 5.95% due-2 June 2024s at a price of 60 cents – provided six advisory roles.

Only three Australian companies – GenesisCare, Rivet Ltd and Scott’s Refrigerated Logistics – were involved in some sort of an insolvency process in 2023, but they provided 16 mandates on a total debt of USD 1.9bn. However, of that USD 1.9bn amount, GenesisCare accounted for USD 1.72bn, while it provided 12 of the total 16 mandates.

The number of advisory roles related to the GenesisCare’s restructuring skyrocketed when the cancer-care provider in June filed in the US Bankruptcy Court for the Southern District of Texas for a Chapter 11 process.

Top advisors 

FTI Consulting topped the financial-advisor table in 2023, winning 14 roles on USD 12.4bn debt with most of its mandates being for liquidation analysis, asset valuations and receiverships. The firm’s only role as a restructuring advisor was in relation to Singapore-listed China retail property-focused Dasin Retail Trust‘s USD 700m debt recast.

Alvarez & Marsal had the second-most mandates during the year with ten roles on USD 11.1bn of debt, with the firm’s mandates also being for roles where it acted as a liquidator, a receiver or as an advisor for debt restructurings.

Haitong International came in third with seven positions on USD 8.9bn of debt with most of its roles being a consent-solicitation agent and dealer manager for exchange offers, though it was also mandated as financial advisor for China SCE Group Holdings’ USD 1.9bn debt restructuring.

By the amount of debt, Houlihan Lokey came first, advising on USD 23.9bn debt, of which USD 17bn came from its role as Chinese developer Country Garden Holdings’ financial advisor. The firm won four advisory roles during the year, all of which were to advise on debt restructurings.

As was the case in 2022, Sidley Austin topped the legal advisor table with 12 roles involving USD 34.6bn debt. All but two of the firm’s 12 roles were to advise Chinese real-estate developers on their respective debt restructurings; it was also appointed as No Va Land’s legal advisor for the Vietnamese developer’s USD 2.9bn debt restructuring and involved in GenesisCare’s Chapter 11 reorganization plan.

Linklaters came in second with seven mandates on USD 8.8bn of debt, while Ashurst also had six roles, only on USD 82m of debt. Three law firms – Kirkland & Ellis, Allen & Overy and Latham & Watkins – tied for fourth place with four mandates a piece.